Publication: Eurasia Daily Monitor Volume: 15 Issue: 32

A series of accusations levied against Latvian banks and officials last week has seriously upended this Baltic State’s banking and financial system. First, the Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury announced sanctions against ABLV Bank. The sanctions announcement alleged ABLV had been involved in money laundering schemes that have assisted North Korea with developing its nuclear program. Additionally, this Riga-headquartered bank was accused of illegal activities in Azerbaijan, Russia and Ukraine (La.lv, February 21). FinCEN also reported that ABLV Bank’s management bribed Latvian officials to buy their support for its high-risk financial activities.

At the same time, the president of the Bank of Latvia, Ilmars Rimšēvičs, was arrested by the country’s Corruption Prevention and Combating Bureau (KNAB) of suspected bribery. He has since been allowed to return to work (though he cannot carry out any duties related to governing the country’s central bank); under the terms of his bail, he must remain in Latvia (Lsm.lv, February 28). The case is unrelated to the abovementioned FinCEN statement about ABLV Bank. But Rimšēvičs’ apprehension by anti-corruption authorities is most probably linked to a case involving another bank, Trasta Komercbanka (TKB), which lost its commercial license and was shut down two years ago (Tvnet.lv, February 27). Some Latvian politicians, experts and authorities think that these recent developments, which have roiled the country’s financial system, were being “played” against Latvia by some “third party” in order to disrupt or attack the country in a “hybrid war”–style operation.

While Latvian Prime Minister Māris Kučinskis is certain that there is enough evidence to suspect the Latvian central bank president of wrongdoing (Nra.lv, February 26), Rimšēvičs’ former colleague and his predecessor at the head of the Bank of Latvia, Einārs Repše, rejects those accusations. “If the president of the LB [Bank of Latvia] is not guilty, he does not have to resign from his position at the moment. It would be a victory for the ‘bad guys’—enemies of Latvia,” Repše wrote on his Twitter account (Diena.lv, February 20). Others have questioned the level of involvement Rimšēvičs could possibly have had in the TKB scandal. The Bank of Latvia played only a minor role in withdrawing TKB’s license. The ultimate decision was taken by the Financial and Capital Market Commission (FCMC), said the Commission’s head, Pēters Putniņš, in an interview with Latvijas Radio. He stressed that the Bank of Latvia has quite limited functions in the field of banking supervision (Tvnet.lv, February 22).

Latvia’s security-sector personnel have raised the alarm that outside actors could be using these current financial and banking scandals against Riga. The Latvian Ministry of Defense has pointed out that the AP news agency’s reporting on Latvia’s connection to various international financial corruption schemes has been reposted with unusual frequency on numerous websites known for distributing messages supporting Russia. As such, the defense ministry has called this media blitz a possible “hybrid”-style operation within a broader information war against Latvia (Mod.lv, Accessed February 27).

The director of the North Atlantic Treaty Organization’s (NATO) Strategic Communication Center of Excellence, Jānis Sārts, supports the Latvian defense ministry’s statement. And he has reiterated the observation that the Latvian banking corruption stories are being systematically reinforced by online media outlets with known pro-Russia biases. “The networks of websites that we have seen amplify the messages [about Latvia’s connections to various financial corruption schemes] are aimed at dividing society. There are two aspects in this situation: there are specific accusation of corruption, but someone is attempting to use them to make things worse,” Sārts alleged (Tvnet.lv, February 23).

Media expert Mārtiņš Kaprāns thinks the Ministry of Defense’s statement should be taken as a warning, arguing that there is a danger that “certain forces” could use the instability in the financial sector in Latvia to paint the country as overwhelmed by corruption (Tvnet.lv, February 23). Therefore, in his view, the country needs to do more to reduce its insecurity in the face of “informational” attacks.

Russia is trying to use the current situation to create and maintain chaos in Latvia, but will not succeed, said Ainars Latkovskis, who chairs the Defense, Internal Affairs and Corruption Prevention Commission of the Latvian Parliament (Nra.lv, February 20). Commenting on the defense ministry’s warning of a large-scale information attack against Latvia from the outside, Latkovskis expressed the view that Russia’s policy is opportunistic and attempts to create a chaos by portraying Latvia as a failed country in the eyes of the international community. “They understand that the situation is ‘hot’ enough and are adding ‘oil to the fire,’ ” the politician noted. “I fully trust the investigative institutions and believe that everything should be done to speed up the investigation,” Latkovskis said, adding that the Latvian Parliament should seek help from the US Federal Bureau of Investigation (FBI) and the European Anti-Fraud Office (OLAF).

“Our country’s enemy has sought for years to weaken Latvian democratic values by constructing and spreading the message that Latvia is a failed country,” stated Artis Pabriks, a current member of the European Parliament and a former minister of defense of Latvia. He added, “Now we see that Latvia’s attempts to address its financial and corruption crisis are being [twisted into the narrative] of Latvia as a crooked and financially corrupt country” (Diena.lv, February 23).

Pabriks suggested that, in order to minimize the impact of the ongoing information campaign against Latvia, the government needs to undertake a fair and quick investigation and bring the Rimšēvics case to trial as soon as possible. “The financial and banking sector, on the other hand, must tackle the allegations made by international organizations, restore the confidence [in Latvia] of the local and international community, and demonstrate [Riga’s] ability to act,” the European Parliament member declared (Diena.lv, February 23).

This year, Latvia will hold elections as well as centennial celebrations of the country’s statehood. As such, 2018 is likely to be quite tense for Latvia, and its politicians are warning the population to be critical in evaluating their sources of information before trusting what they read or hear. Certain provocations or “information warfare” activities leading up to the election can certainly be predicted, particularly when taking into account the experience of other Western democracies in recent years. But clearly, the Latvian authorities’ ability to successfully employ strategic communications as well as the level of media literacy among the public will be increasingly tested during the coming months.

This issue of Militant Leadership Monitor begins with two Briefs, covering Congo’s M23 leader Sultani Makenga and Malian Militant Cheibane Ould Hama. The issue continues with a small montage of leaders to watch in post-Mursi Egypt, by Michael W.S. Ryan. Dominic Kalms provides an in-depth look at the career... MORE